FOX19 Investigates: Co-Signing Companies - Cincinnati News, FOX19-WXIX TV

FOX19 Investigates: Co-Signing Companies

(FOX19) -

Maybe you have a few credit blips. Maybe you don't have a steady stream of income. No matter the reason, it's not uncommon for landlords these days to request a co-signer.

When former NFL player John Diggs found an apartment, he knew he had scored a touchdown. There was just one catch.

"My credit has some challenges and the landlord requested that I get a co-signer," he said.

John didn't want to burden his family, so he paid a company to co-sign the lease for him.

"I didn't know these kind of services existed," Diggs said.

Bankrate.com's Janna Herron says the premise is simple: For a fee, companies like WeCosign, Insurent (which currently only operates in New York and New Jersey), and Co-signer.com will guarantee your lease for a contractual period of time --- even if you have bad credit or an unstable source of income.

"If you default, they pay the landlord the rest of the lease," Herron said.

With the financial crisis and shaky job market, experts say these services are in demand.

"We have people that are students and then we have people that are mid-life age. And we've also signed athletes and layers and doctors," said Frank Jakubaitis, the general manager of WeCosign, Inc.

Fees vary depending on the service. But you can expect to pay a percentage of your monthly or annual rent, typically ranging between six-percent and ten-percent.

"You may have to pay some other fees, such as a sign-up fee, a processing fee, a background check fee, and those could easily add another $100 to $200," said Herron.

Even though these services are designed for those with poor credit, applicants still have to qualify.

"They have their own minimum income and credit score requirements," Herron said. "And some others will deny you if you have too many outstanding bills, too many evictions, or a violent criminal record."

We contacted the Better Business Bureau, which told us it's important to keep in mind that this is "a fairly new industry," one that could have "real potential for abuse."

In fact, we found several complaints online.

Herron says don't be afraid to try friends and family first.

"It's the option of last resort," she said of the co-signing companies.

But former NFL player John Diggs was happy to have the option. Within days he had the new apartment keys in his hand.

"It's a sense of peace, a sense of warmth that I now have my home," he said. "And I'm on my way to re-building and re-establishing my life."

Copyright 2012 WXIX. All rights reserved.

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